Despite the effort made by the government of Kenya to support
the growth of SMEs sector by creating enabling environment
through appropriate legal and regulatory procedures, and in
spite the fact that banks have recently made micro-credit accessible to
SMEs, there is no indication that the sector is growing. This research
was therefore set to investigate the extent to which the owners or
managers of Small and Medium Enterprises kept records in their
businesses. For the success of SMEs accurate records of business
transactions need to be kept. The target population of the study was
the owners or managers of SMEs in Chuka Town. The study used both
purposive and random methods to sample the respondents. The study
found that the SMEs do not keep complete accounting records because
of lack of accounting knowledge and the cost of hiring professional
accountants. As a result, there is inefficient use of accounting
information to support financial performance measurement by SMEs.
This made it difficult for the entrepreneurs to calculate their business
profit efficiently. Education is also critical to enable small business
owners acquire more knowledge on bookkeeping practices. This is
through introduction of seminars, workshops and training sessions
where such knowledge can be acquired. Universities and colleges
should also offer more courses related to bookkeeping apart from the
general business courses